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instruments and hedging activities and requires us to recognize all derivatives as either
assets or liabilities on the balance sheet and measure them at fair value. Gains and losses
resulting from changes in fair value would be accounted for depending on the use of the
derivative and whether it is designated and qualifies for hedge accounting. We do not
expect the adoption of SFAS 133 to result in any material transition adjustment to earn-
ings in the first quarter of fiscal 2001.
In December 1999, the Securities and Exchange Commission (the “SEC”) issued Staff
Accounting Bulletin No. 101 (“SAB 101”), “Revenue Recognition in Financial
Statements.” SAB 101 summarizes certain of the SEC’s views in applying accounting
principles generally accepted in the United States of America to revenue recognition in
financial statements. In March 2000, the SEC issued SAB 101A, which delayed the
implementation date of SAB 101. In June 2000, the SEC issued SAB 101B, which further
delayed the implementation date of SAB 101. We adopted SAB 101 beginning December
2, 2000. The adoption of SAB 101 did not have a material impact on our financial posi-
tion or results of operations.
In March 2000, the FASB issued Financial Interpretation No. 44 (“FIN 44”), “Accounting for
Certain Transactions Involving Stock Compensation—an Interpretation of APB No. 25.”
FIN 44 clarifies the application of APB 25 for certain issues including (a) the definition of
employee for purposes of applying APB 25, (b) the criteria for determining whether a
plan qualifies as a noncompensatory plan, (c) the accounting consequence of various
modifications to the terms of a previously fixed stock option or award, and (d) the
accounting for an exchange of stock compensation awards in a business combination.
FIN 44 was effective July 1, 2000, except for the provisions that relate to modifications
that directly or indirectly reduced the exercise price of an award and the definition of an
employee, which were effective after December 15, 1998. The adoption of FIN 44 did not
have a material impact on our financial position or results of operations.
In March 2000, the Emerging Issues Task Force (the “EITF”) published its consensus on
Issue No. 00-2, “Accounting for Web Site Development Costs,” which requires that costs
incurred during the development of Web site applications and infrastructure involving
developing software to operate the Web site, including graphics that affect the “look and
feel” of the Web page and all costs relating to software used to operate a Web site, should
be accounted for under Statement of Position 98-1 (“SOP 98-1”), “Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use.” However, if a plan
exists or is being developed to market the software externally, the costs relating to the soft-
ware should be accounted for pursuant to Statement of Financial Accounting Standards
No. 86 (“SFAS 86”), “Accounting for the Costs of Computer Software to Be Sold, Leased,
or Otherwise Marketed.” We adopted Issue No. 00-2 in the fourth quarter of fiscal 2000.
The adoption of Issue No. 00-2 did not have a material impact on our financial position
or results of operations.
In March 2000, the EITF reached a consensus on Issue No. 00-3, “Application of AICPA
Statement of Position 97-2, Software Revenue Recognition, to Arrangements That Include
the Right to Use Software Stored on Another Entity’s Hardware.” The Issue states that
a software element covered by Statement of Position 97-2 (“SOP 97-2”) is only present in
a hosting arrangement if the customer has the contractual right to take possession of the
software at any time during the hosting period without significant penalty and it is feasible
for the customer to either run the software on its own hardware or contract with another
party unrelated to the vendor to host the software. We do not expect the adoption of Issue
No. 00-3 to have a material impact on our financial position or results of operations.
In March 2000, the EITF reached a consensus on Issue No. 00-8, “Accounting by a
Grantee for an Equity Instrument to Be Received in Conjunction with Providing Goods
or Services.” Issue No. 00-8 addresses the date to be used by the grantee to measure the
fair value of those equity instruments for revenue recognition purposes for transactions
in which an entity provides goods or services in exchange for equity instruments. In addi-
tion, it addresses how the grantee should account for changes in the fair value of equity
instruments whose terms are subject to adjustment after the accounting measurement
date. Issue No. 00-8 applies to all grants and to modifications of existing grants that occur
after March 16, 2000. The adoption of Issue No. 00-8 did not have a material impact on
our financial position or results of operations.